Basically, trend-following is a trading discipline that consists of following price action in a stock over everything else, including fundamentals. Trends can develop in stocks in multiple ways. For instance, I prefer to buy stocks that are in a strong uptrend and have bullish upside volume flows. That being said, there's another way to trade trends that goes outside the conventional thinking of most trend followers and that is buying technically oversold stocks.

Stocks become oversold for many reasons, but the basic reason that I care about as a trend follower is that there were more sellers than buyers. Sure, this is simplistic, but why make trading any more difficult than it has to be?

Once a stock becomes oversold, I try to identify when buyers are moving back into the stock for a possible oversold bounce. One way to identify an oversold stock is to follow the relative strength index once it gets near or below 30. Another way is to look for a stock that's had an extended downtrend. Once I find an oversold situation, I start to look for a stock that's forming a bottoming pattern, or stabilizing at a defined level. I then look for above-average upside volume to move back into the name as a key downtrend line or resistance levels are taken out.

Traders have to remember that oversold can always become more oversold. That's why it's important to follow the price action and look for oversold stocks that have a probability--not a guarantee--of changing their trend and potentially spiking higher off depressed levels. These types of trades can yield big gains quickly, but remember that the price action is more important than the simple fact the stock is extremely oversold.

One oversold stock that could be setting up for a sharp rebound higher is Twitter (TWTR), a global platform for public self-expression and conversation in real time. This stock has been hit hard by the sellers so far in 2014, with shares down by over 15%.

If you take a look at the chart for Twitter, you'll notice that this stock recently gapped down sharply following its earnings report, with shares diving from its recent high of $67.24 to its low of $49.99 a share with heavy downside volume. Following that gap down, shares of TWTR were able to hold above a psychologically important level at $50 a share. This stock has now started to rebound a bit off that level and it's quickly moving within range of triggering a breakout trade that could take the stock back into its gap-down-day zone.

Traders should now look for long-biased trades in TWTR if it manages to break out above Tuesday's high of $54.37 to some key near-term overhead resistance at $54.92 a share with high volume. Look for a sustained move or close above those levels with volume that hits near or above its three-month average volume of 20.95 million shares. If that breakout hits soon, then TWTR will set up to re-fill some of its previous gap-down-day zone that started at $67.24 a share. Some possible upside targets if TWTR gets into that gap with volume are $58 to $62.50 a share, or even $67 a share.

Traders can look to buy TWTR off any weakness to anticipate an oversold bounce and simply use a stop that sits right below $50 a share. One can also buy TWTR off strength once it starts to take out those breakout levels with volume and then simply use a stop that sits a comfortable percentage from your entry point.

First Solar

A solar energy player that's starting to look interesting here for an oversold spike higher is First Solar (FSLR), which manufactures and sells photovoltaic solar modules with an advanced thin-film semiconductor technology, and designs, constructs and sells PV solar power systems. This stock has been hit hard by the bears over the last three months, with shares off sharply by 18%.

If you take a look at the chart for First Solar, you'll notice that this stock has been downtrending badly for the last three months, with shares sliding sharply lower from its high of $65.99 to its recent low of $47.04 a share. During that downtrend, shares of FSLR have been consistently making lower highs and lower lows, which is bearish technical price action. That said, shares of FSLR have started to find some buying interest right around $47 a share and the stock has now rebounded higher off that level. This move is quickly pushing shares of FSLR within range of triggering a major breakout trade above a key downtrend line.

Traders should now look for long-biased trades in FSLR if it manages to break out above some near-term overhead resistance levels at $52.13 to its 50-day moving average at $53.48 and then above $53.65 a share with high volume. Look for a sustained move or close above those levels with volume that hits near or above its three-month average action of 3.70 million shares. If that breakout triggers soon, then FSLR will set up for an oversold bounce above that downtrend line that takes the stock back towards $58 to $62 a share, or even its 52-week high at $65.99 a share.

Traders can look to buy FSLR off any weakness to anticipate that breakout and simply use a stop that sits right below some major near-term support at $47.04 a share. One could also buy FSLR off strength once it starts to take out those breakout levels with volume and then simply use a stop that sits a comfortable percentage from your entry point.

Five Below

Another oversold bounce opportunity could be developing here for specialty value retailer Five Below (FIVE), which offers various products priced at $5 and below. This stock has been destroyed by the sellers over the last three months, with shares off sharply by 28%.

If you take a look at the chart for Five Below, you'll notice that this stock has been downtrending badly over the last two months and change, with shares being beaten-down from its high of $55.28 to its recent low of $33.94 a share. During that downtrend, shares of FIVE have been making mostly lower highs and lower lows, which is bearish technical price action. That said, shares of FIVE have now started to come off its recent low of $33.94 and it's quickly moving within range of triggering a big breakout that could lead to a sharp oversold bounce.

Traders should now look for long-biased trades in FIVE if it manages to break out above some near-term overhead resistance levels at $37.35 to $38 a share with high volume. Look for a sustained move or close above those levels with volume that hits near or above its three-month average action of 1.10 million shares. If that breakout triggers soon, then FIVE will set up to re-test or possibly take out its next major overhead resistance levels at $40 to its recent gap-down-day high of $41.73 a share. Any high-volume move above $41.73 will then give FIVE a chance to re-fill some of its previous gap-down-day zone that started just above $44 a share.

Traders can look to buy FIVE off any weakness to anticipate that breakout and simply use a stop that sits right around some key near-term support levels at $35.17 to $33.94 a share. One can also buy FIVE off strength once it starts to take out those breakout levels with volume and then simply use a stop that sits a comfortable percentage from your entry point.

KaloBios Pharmaceuticals

An under-$10 biopharmaceutical player that looks poised for a sharp oversold bounce is KaloBios (KBIO), which develops monoclonal antibody therapeutics for the treatment of respiratory diseases and cancer in the U.S. This stock has been blown up by the bears so far in 2014, with shares off sharply by 30%.

If you look at the chart for KaloBios Pharmaceuticals, you'll notice that this stock recently gapped down sharply from over $4.75 to under $3.25 a share with heavy downside volume. That move wasn't the end of KBIO's slide, since the stock continued lower and tagged a recent low of $2.56 a share. That move has now pushed shares of KBIO into extremely oversold levels, since its current relative strength index reading is 33.85. Oversold can always get more oversold, but it's also an area where a stock can experience a powerful bounce higher from once buyers show up. Shares of KBIO have started to rebound nicely off that $2.56 low and it's now quickly moving within range of triggering a major breakout trade that could take the stock back into its gap-down-day zone.

Traders should now look for long-biased trades in KBIO if it manages to break out above some near-term overhead resistance levels just above $3.25 a share and then above its gap-down-day high of $3.56 a share with high volume. Look for a sustained move or close above those levels with volume that hits near or above its three-month average action of 301,037 shares. If that breakout hits soon, then KBIO will set up to rebound higher off oversold levels and re-fill some of its previous gap-down-day zone that started just above $4.75 a share.

Traders can look to buy KBIO off any weakness to anticipate that breakout and simply use a stop that sits a comfortable percentage from your entry point. One can also buy KBIO off strength once it starts to clear those breakout levels with volume and then simply use a stop that sits a comfortable percentage from your entry point.

Gogo

My final technically oversold stock to put on your radar here is Gogo (GOGO), which provides in-flight Internet connectivity and wireless in-cabin digital entertainment solutions in the U.S. and internationally. This stock has taken a beating so far in 2014, with shares off sharply by 14%.

If you look at the chart for Gogo, you'll notice that this stock has been downtrending badly for the last two months, with shares moving lower from its high of $35.77 to its recent low of $18.18 a share. During that downtrend, shares of GOGO have been making mostly lower highs and lower lows, which is bearish technical price action. That said, shares of GOGO recently found some buying interest at $18.18 a share, which sits right above some previous long-term support around $17.11 a share. That could be signaling a bottom is in. Shares of GOGO have now started to bounce higher of $18.18 and it's quickly moving within range of triggering a breakout trade above some near-term overhead resistance and a key downtrend line.

Traders should now look for long-biased trades in GOGO if it manages to break out above some near-term overhead resistance at $22.08 a share with high volume. Look for a sustained move or close above that level with volume that hits near or above its three-month average action of 3.52 million shares. If that breakout triggers soon, then GOGO will set up to bounce higher and re-test its next major overhead resistance levels at $24 to $24.25 a share to its 50-day moving average at $25.11 a share. Any high-volume move above those levels will then give GOGO a chance to tag $27 to $28 a share.

Traders can look to buy GOGO off any weakness to anticipate that breakout and simply use a stop that sits right below some key near-term support at $18.18 a share. One can also buy GOGO off strength once it starts to take out $22.08 a share with volume and then simply use a stop that sits a conformable percentage from your entry point.

At the time of publication, author had no positions in stocks mentioned.

Roberto Pedone, based out of Delafield, Wis., is an independent trader who focuses on technical analysis for small- and large-cap stocks, options, futures, commodities and currencies. Roberto studied international business at the Milwaukee School of Engineering, and he spent a year overseas studying business in Lubeck, Germany. His work has appeared on financial outlets including CNBC.com and Forbes.com. You can follow Pedone on Twitter at www.twitter.com/zerosum24 or @zerosum24.